From the time we’re old enough to walk, we’re taught that if we work hard and remain persistent that we’ll get what we want. And I wholeheartedly agree with that statement – although I would add “work smart” to the mix.
That statement has never been more true than it is in the world of Forex, especially remaining persistent. I firmly believe that the only thing that separates the successful Forex traders from those who are not is the fact that the successful never gave up.
But there comes a point when the “work hard” mentality will get you into trouble as a Forex trader. Not only can it get you into trouble, it can prevent you from ever becoming consistently profitable.
At what point does this occur, you ask? That’s exactly what we’re going to uncover in this article.
Working Hard Vs. Working SmartAs I mentioned above, working smart is just as important as working hard. You can row a boat as hard and as fast as you possible can, but if you aren’t pointed in the right direction, you’ll never reach your destination.
The same holds true for the things we want in life. It’s important that we’re not just working hard, but also working in the most efficient and accurate manner possible.
Working smart also means knowing when to not work as hard. That may sound counterintuitive, but allow me explain…
Let the Market do the Workforex market is a 24 hour market
The Forex market is constantly moving – 24 hours a day, 7 days a week. It never eats or sleeps and it certainly never gets emotional. It’s a workhorse, plain and simple.
So why fight it? Why try to influence the direction of the market by obsessively watching over your trade?
I know this is a common habit among traders because I’ve been in your shoes. I’ve experienced the same struggles that you’re currently experiencing, which is the very reason why I created my price action course and community.
Having traded financial markets since 2003, I can promise you that no amount of watching, worrying or dancing is going to persuade the market to do what you want it to do. There has to be a point at which you let go of the reigns and allow the market to take control.
That point comes the second you click the buy or sell button. I’m not saying that you can’t manage your trade. But there’s a big difference between managing a trade and trying to make a trade work. The latter will get you in trouble every time.
This sounds simple, and it is, but it certainly isn’t easy. That’s because we’re all programmed to think that greater effort equals greater reward. This is true 99% of the time, except when you’re in a trade. Then it’s best to trust your judgement and allow the market to do what it does best.
Luckily there are ways to resist the urge to work hard while you’re in a trade. Here are three of my favorite:
#1 Create a RoutineBecoming a consistently profitable Forex trader is all about discipline. The best way to harness the power of discipline is to create a routine and then stick to it. This goes for everything you do from the time you wake up in the morning to the moment you go to bed at night.
It’s important to document how you plan on managing your trading time throughout the day. Will you trade in the morning before work? How about after work or perhaps during lunch breaks? How long will you spend identifying potential setups? At what times during the day will you check on any open positions? These are all essential things you should document as part of your daily routine.
The same goes for a weekly and monthly routine. When will you analyze your performance from the previous week? How about the previous month? You should also include a time for identifying setups for the upcoming week. I typically like to do this on Saturday morning after breakfast and a cup of coffee, of course.
It’s time to take a step back and reevaluate how and when you trade. Creating a routine and then sticking to it will help develop discipline in your trading, which in turn will allow you to recognize when it’s time to let the market do the heavy lifting.
#2 Know Your RoleKnowing the part you play as a Forex trader is something most people overlook. It’s too easy to say, “I’m a Forex trader”. What does that actually mean?
Identifying the role you play as a trader means knowing what you can control and what you cannot control.
Why is this important?
It’s important because knowing your role as a trader provides an understanding of where your hard work has to stop.
Think of it as an assembly line. Each worker in an assembly line has a specific role. When one worker’s job is done, the next worker takes over and performs his/her role. This process repeats itself until the job is finished.
The same goes for trading the Forex market. You can work hard on identifying a favorable setup, but once you press the buy or sell button, it’s up to the Forex market to finish the job.
As a trader, you can control many things. You control what instruments you trade and when you trade them. You control the trading strategy you use including the entry price, stop loss placement and profit target. Your have a lot of control as a Forex trader.
However the one thing you cannot control is the market. You have no say over how high or how low a market moves within a day, week or month. You can’t control if support or resistance is going to hold; only the market can do that.
It’s the same idea as the assembly line. You control where, when and how a trade gets put on, while the market controls the outcome. Of course you can stack the odds in your favor by using confluence factors, but the ultimately decision of whether a trade will be profitable should be left to the market.
#3 Use a Well-Positioned Stop Lossusing a well positioned stop loss in the forex market
This is perhaps the most important of the three. It isn’t enough to simply use a stop loss. You need to implement a stop loss strategy if you want to get ahead in the Forex market.
A well-positioned stop loss will, in many ways, manage your trade for you. By “well-positioned” I simply mean a stop loss that is strategically placed in a way that, if it’s triggered, the setup is no longer valid. In other words, if the market reaches your stop loss the setup has become unfavorable, thus it’s in your best interest to get out of the trade.
Using a well-positioned stop loss is like having a trading assistant. It provides you with the ability to walk away from an open trade, which in turn gives the market the room it needs to work.
SummaryThere’s a big difference between working hard and working smart when it comes to achieving consistent profits in the Forex market. The trader who works smart knows that there comes a point at which he/she has to let the market do the heavy lifting.
Once you enter a trade, the “less is more” mentality should take over. The less you do while in a trade, the better the odds are for that trade to end with a profit.
Those who constantly interfere with their trades are shooting themselves in the foot. The worst part is, they think they are simply working hard – which is what they’ve been groomed to do their entire lives. Little do they know they are sabotaging any chance of becoming a consistently profitable Forex trader.
Just remember to stay disciplined and endeavor to control only the things which you can control. It’s your job to put yourself in the most favorable position possible to make money. The rest is up to the market.
